The fraudulent scheme involved 24 defendants and centered on a garden variety piece of medical equipment: medical braces. Using a different application of telecommunications–the telemarketer–the parties deployed a phone bank network to contact Medicare recipients for whom orders for unnecessary medical braces were placed and billed to Medicare. The Justice Department said physicians, insurers, and brace suppliers conspired to place false orders for $424 million in false claims, for which Medicare reimbursed them $200 million.

According to the DOJ, "Stockett admitted that he and others agreed to solicit and receive illegal kickbacks and bribes from patient recruiters, pharmacies, brace suppliers and others in exchange for arranging for doctors to order medically unnecessary orthotic braces (braces) for beneficiaries of Medicare and other insurance carriers.

"Stockett admitted that, in order to obtain the orders that were transmitted in exchange for kickbacks and bribes, he and other executives and employees of the Video Doctor Network paid illegal kickbacks and bribes to health care providers to order medically unnecessary braces for Medicare beneficiaries. Many of these orders were written after only a short telephone call between the health care provider and the beneficiary, with whom the health care provider had no prior doctor-patient relationship."

"This global scheme that took advantage of hundreds of thousands of vulnerable individuals was fueled by unbounded greed without regard for the rules of law," said Deputy Inspector General for Investigations Gary L. Cantrell of the U.S. Department of Health and Human Services Office of Inspector General.

The Video Doctor Network scandal is the second to rock the telemedicine world in less than a year. Last December, Teladoc CFO Mark Hirschhorn resigned following an investigation into his relationship with a female subordinate that involved alleged stock fraud. A class action lawsuit charged that Hirschhorn had been giving his subordinate stock tips for years that enriched her.

But publicly traded Teladoc seems to have shaken off the scandal. Its shares tell from the high $80s in 2018 to below $45 a share following the bad news, triggering the lawsuit. But they have recovered to almost $63 a share as of this week, reaching nearly $72 a share in August.

Read more:

• House bill would establish health care fraud prevention task force
• DOJ arrests 600 in latest health care fraud crackdown
• How Medicare scammers defrauded Miami-Dade courts